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Marshall Hargrave
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Former registered investment adviser rep and current entrepreneur. Now running an equity research company. Affinity for activist campaigns and targeted stocks.
My blog:
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  • Questioning Ford's Potential 0 comments
    Mar 10, 2014 9:27 PM | about stocks: F

    A less than exciting 2014

    For the year 2014, pre-tax profit is expected to be between $7 billion and $8 billion compared to $8.6 billion in 2013. Revenues are expected to be in line with 2013 while operating margins and cash generated from operations are expected to be lower.

    Volumes in North America are expected to be lower because of downtime related to model changes and pricing is expected to be impacted by the extremely competitive environment. Manufacturing costs are expected to be higher and operating margin guidance of between 8% and 9% is lower than the 9.9% achieved in 2013. South America is expected to achieve breakeven. I'd look for South America to continue being a problem because of the depressed state of the local economies.

    Just how bumpy is the road ahead?

    Ford has been profitable for eighteen quarters, and the question becomes; for how long can the trend continue? The company is quite dependent on North American sales and the recent sales slump can be worrisome.

    Putting this in perspective, Ford's profit before tax in North America was $8.78 billion in 2013, compared to $8.6 billion as a whole. In other words, North America earned more than the operations throughout the world. It loses money in Europe and Asia-Pacific, as well as South America.

    Bottom line

    Ford still looks cheap when compared to the other major carmakers. However, there's no reason to rush out and buy. However, its over-dependence on the North American market could prove to be an Achilles heel.

    Stocks: F
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